lax Question Spotlights Spectacular Growth of
Co-Operative Movement in U. S. in Recent Years
. v
Private Business Complains of Disadvantage;
Co-Ops' Volume Tops Five Billion Dollars
By AL JEDLICKA
When congress ponders a new revenue bill this fall, one of
the major propositions under discussion will be the taxation of
co-operatives. Under pressure of established tax-paying en
terprises, the solons can be expected to comb the situation
thoroughly, since the rapid growth of co-operatives in the
present century not only poses the question of tax equality,
but also of maintenance of revenue.
But though the question of taxation itself appears to head
up the co-operative question now, there are other and even
more deeply rooted underlying causes, principally the move
ment s threat to the tradition
al American business system.
In this respect, the whole co
operative development may
well shape as an economic
evolution, though frequent
cycles have robbed it of the
consistency necessary for his
torical reform.
At the present time, how
ever, American co-operatives
are on a rising tide, with
the strongly established
farm organizations number
ing 4,390,000 members being
steadily complemented by ur
ban consumer and manufac
turing groups. During the 1943-’44
season rural marketing and pur
chasing co-operatives alone did over
5 billion dollars worth of business,
mostly on a tax-free basis.
As a result of the steady growth
of co-operatives spearheaded by the
farmer associations, and their ex
tension into various fields, tradi
tionally established American busi
nessmen are stirring uneasily.
Whereas only the handler and sup
plier of agricultural products ar.d
material formerly had been pressed
by the co-operatives, competition
now has been extended to manu
facturers of farm machinery, hard
ware, paints, electric refrigerators,
washing machines, toasters, clocks,
cigars, cigarettes, lipstick, tires and
batteries
In addition, co-operatives now
drill wells, own pipe lines, refine
petroleum, possess timber tracts,
write insurance, and operate banks,
telephone companies and electric
power installations.
From the beginning, the co-opera
tive movement assumed the nature
of a Joint enterprise for performing
a non-profltable service for each
participant’s individual welfare.
Though contemporary history
traces the real origin of the co-oper
ative movement back to Rochdale,
England, where poor working peo
ple organized a grocery co-op in
1844 to avail themselves of cheaper
food, some historians credit the
birth of the movement to local farm
groups which banded together in
the U. S. in the 1820s to reduce in
surance costs.
Following the establishment of the
local fire insurance groups, the co
operative movement assumed an
other form in the U. S. after the
civil war in the national farm
Grange, a social and educational or
ganization also bent upon relieving
stringent economic conditions. Even
tually turning to co-operative meth
ods to attain its early objectives,
the Grange failed in promoting a
purchasing co-op because of the un
scrupulosity of agents: bogged in
pushing consumer co-ops partly as a
result of the panic of 1873, and gave
up a farm machinery manufactur
ing co-op following overproduction
and under-servicing.
As the co-operative movement be
gan to take root here during World
War I and congress recognized it as
an instrument for aiding the farm
producer, legislation was enacted to
afford tax relief to operators. In
1916, congress stipulated that farm
ers, fruit growers and like associ
ations organized and operated on a
co-operative basis and acting as
selling agents for their members
should not be requested to pay an
income tax on earnings.
In subsequent legislation, the
solons provided that co-operatives
I could purchase as well as sell for
producers: deal with non-members
as well as members; become cor
porations and pay interest on stock,
and not be prosecuted under the
anti-trust laws. t
The government also set up a fed
eral agency to loan money to co
operatives in 1921, with the financial
machinery expanded through the
farm credit act of 1933. In 1933, the
securities act also permitted co-op
eratives to sell equities without
prior approval of the Securities and
Exchange commission, which exer
cises that right over corporate is
sues.
Though historians claim for the
Facts on Farm Purchasing and Marketing Co-Ops 1943-44
Geographic Division Associations Membership Business
Number % Number % (1.000 %
West North Central. 4.142 40.2 1.348,630 30.7 1,531,040 29.7
East North Central. 2,451 23.8 1,116,170 25.4 1,165,070 22 6
Pacific. 82 8 8.0 244,270 5 6 798,420 15.5
Middle Atlantic . 604 5.9 399.500 9.1 441,790 8.6
South Atlantic . 477 4.6 401,400 9.1 378,440 7.3
West South Central. 795 7.7 261,850 6.0 291,500 5.6
Mountain . 569 5.5 211,350 4.8 249,910 4.8
New England . 161 1.6 139,840 3.2 174,800 3.4
East South Central. 273 2.7 266,990 6.1 129,030 2.5
Total..10,300 100.0 4,390,000 100 0 5,160,000 100 0
I
v-—-—
U. S. the credit for the birth of the
co-operative movement, the Rocn
dale enterprise of 1844 still receives
general recognition for establishing
the three general principles under
which co-operatives widely function
today. These principles include:
1. One vote to each member re
gardless of stock holdings.
2. Distribution of net savings to
patrons in proportion to their pur
chases.
3. Limited fixed interest on cap
ital shares instead of variable and
unlimited dividends.
Organization of farm co-ops is rel
atively simple, with the pattern
moulded to give each member an
equal controlling interest in the
operations. Upon subscribing for
capital stock or paying a member
ship fee, the local group then adopts
by-laws and elects a board of direc
tors. A manager is hired, policies
outlined and facilities secured. Al
though in charge, the manager re
mains under supervision of the di
recting board.
In addition to observing the Roch
dale principles in voting, savings
distribution and stock payments, lo
cal groups often confine ownership
to farmers raising products handled
by the co-op; restrict securities
transfers, and limit the amount of
shares a member may hold.
While co-operatives are generally
organized on the local level, they
usually affiliate with regional
groups to obtain maximum effi
ciency of operation, with the region
al bodies in turn sometimes combin
ing with national associations. But,
in any case, the local group retains
a voice in the broadened organiza
tion through the selection of dele
gates.
While membership fees, stock
sales and reserves provide working
capital, co-operatives borrow on a
large scale to finance operations, a
study of the Farm Credit adminis
tration in 1939 revealing that ap
proximately one-half of the co-ops
then existent resorted to loans.
While figures show 4,390,000 mem
bers of 10,300 farm marketing and
purchasing co-ops, the actual num
ber of individuals participating in
the movement may be considerably
less since a person may belong to
more than one organization.
With 7,522 units and 2,730,000
members, the farm marketing co
operatives do by far the largest bus
iness, with 1943-’44 activities total
ing almost $4,500,000,000, Handling
of dairy products accounted for
$702,000,000; livestock, $636,000,000;
grain, dry beans and rice, $452,000.
000; cotton and its products, $258.
000,000; fruits and vegetables, $160,
200,000; poultry and eggs, $130,000,
000; tobacco, $120,000,000; wool and
mohair, $107,000,000; nuts, $49,
000,000, and miscellaneous. $115,
000,000.
For the 2,778 purchasing co-ops
with 1,660,000 members, total busi
ness for the 1943-'44 season was
placed at $730,000,000. Seventeen
major regional procurement organ
izations alone secured $151,640,000
of feed; $50,702,000 of gas, oil and
grease; $19,671,000 of fertilizer, and
$10,893,000 of seed.
Never as successful in the U. S. as
in Britain, American urban or con
sumer co-ops are insignificant
alongside of the farm organizations.
It has been figured that there are no
more than 400 units at the most with
110,000 members doing about $5,000,*
000 business annually. Though con
sumer labor co-ops have failed in
the past, the CIO’s entrance into the
field on a limited basis bears watch
ing anew, with the union tactics ap
parently aimed at making up future
tighter wage rates by reducing
staple living costs.
In singing the praises of farm co
ops, advocates describe the move
ment as a means of putting the
country’s gigantic rural plant on a
more efficient basis, with resultant
profits to the producer.
This increased efficiency can be
attributed to both the size of co-oper
atives and the nature of their own
ership. By banding together, farm
ers are able to purchase goods at
lower prices, and group distribution
results in smaller overhead and de
creased handling charges. By own
ing the business, of course, co-oper
ators avert dealers’ margins.
Though tax-exempt co-operatives
have been the target of competitive
businesses complaining of their tax
preferment, R. Wayne Newton,
manager of the National Association
of Co-operatives, declares that the
increased return of farmers results
in payments of higher individual
income taxes. At the same time,
Newton says, the larger profits en
able operators to spend more on
merchandise in the local communi
ties.
Charges that co-ops are making
huge profits on their operations only
serves to emphasize the size of mar
gins formerly enjoyed by private
dealers. Newton avers. By banding
together for co-operative operations,
farmers have tended to offset their
Successful co-ops include refinery
at McPherson, Kan., top, and grain
elevator of Indiana Farm bureau at
Indianapolis, Ind.
previous disadvantage of being com
pelled to sell their products on a
flexible open market and buy on a
more or less rigid retail price level,
he further states.
In spearheading the opposition to
tax-exempt co-operatives, the Na
tional Tax Equality association
points to the fact that co-op reserves
retained after patronage refunds re
main untaxed, thus enabling them
to do business at lower cost while
also permitting continuing expan
sion. As a result, the NTEA asserts,
co-operatives are growing at a rate
of 10 times that possible for tax
paying enterprises.
Not only that but many lax-pay
ing corporations have shifted to a
tax-exempt status either through ac
quisition by co-operatives or by the
voluntary action of stockholders,
NTEA declares.
As examples, NTEA president,
Ben McCabe, cites the northern Cali
fornia holdings of the Rod River
Lumber company, bought by the
Fruit Growers’ Supply company, a
subsidiary of the California Fruit
Growers’ exchange, with a loss to
the U. S. treasury of nearly $1,000,
000 a year in tax revenues; the
Ohio Cultivator company of Belle
vue, Ohio, purchased by the Na
tional Farm Machinery Co-oper
ative Inc., with a loss of about $196,
000 annually to Uncle Sam’s coffers,
and the Globe Refining company of
McPherson, Kans., taken over by
the National Co-operative Refinery
association.
Against the background of al
ready established co-operatives and
the shift of some tax-paying enter
prises to a non-paying co-op basis.
McCabe also cites the possibility of
the growth of labor-sponsored con
sumer organizations, which would
remain tax-free on two counts: one,
because ownership would be vested
in tax-exempt unions, and two, be
cause they would distribute earn
ings before computing their levies.
Study Co-Ops
Co-operative principle and the
technique of co-operative action by
rural and urban dwellers were given
extensive study in religious training
schools sponsored by Catholic and
Protestant groups throughout the
United States this summer.
Between June and September 57
rural life schools and institutes for
Catholic priests and teaching sisters
were scheduled by the National
Catholic Rural Life conference. Not
less than 30,000 priests and nuns
were to be contacted.
'Hl.Phillipj- )
wmj
THE SUPER-CHICKEN
-
The poultry world is out to pro
duce the Chicken of Tomorrow. It
is working on a postwar kluck
kluck that will give a greater per
centage of white and dark meat, a
fowl that will even have meat on the
neck and wings.
•_
The Baby Chick Association of
America and outstanding poultry
experts are to convene to set stand
ards for the Postwar Bird. If they,
by any chance, get an order of
chicken on a train or in a restaurant
on the way to the meeting, their
zeal for the achievement of their
goal should be warmed 90 per cent.
»
Our experience with chicken late
ly leads to the conclusion that there
is a crying need for a chicken that
will have any meat whatsoever
on it.
»_
We don’t know about the Chicken
of Tomorrow, but the Chicken of To
day belongs among the war crimes.
, •_
There is not enough meat on most
restaurant chicken to hold the feath
ers on. They must have been feed
ing these birds plastic cracked corn.
■
Or Is it the fault of the chefs,
whose practice it seems to be to
cook a chicken only in some form
that will magnify its faults?
_•_
There may be chickens in Amer
ica with meat on them, but the res
taurants have been getting the other
kind. A good many chefs seek to
cover up the faults of these birds
by serving them in the style called
‘‘Southern Fried.”
_•_
Now, the real Southern fried
chicken is a delicacy, but too many
cooks in the East, West and North
have been merely demonstrating
that they don’t know their compass
points.
_•_
We don’t know what the stuff Is
that they have been frying the chick
ens in, but it could be a combination
of sawdust, putty and discarded
chewing gum.
♦ .
We got a Southern fried chicken
the other night that must have had
a wrapper made from the sweep
ings of a porch where the painter had
been burning off the paint with a
blowtorch.
There was some excuse for the
Southern fried “wrapper,” as the
chef didn’t have much to work on in
the first place. Our dining compan
ion swore that his order was a wood
pecker wrapped in fire-hose and
dipped in hot tar.
•_
The chicken a la king hasn’t been
running good, either. It has been
strictly a libel on royalty.
»_
And have you ordered any chick
en salad recently? Now we know
what becomes of those old ends of
lead pencils.
• • •
FALL REVERIE
A haze on the far horizon.
The infinite tender sky—
The ripe rich tint of the cornfield
And the wild geese sailing high;
And all over upland and lowland
Hot brakes and the smell of
gas. . . .
Some of us call it autumn.
But others just let it pass.
SO SHE’S NERVOUS!
A California judge, granting Bar
bara Hutton a quickie divorce, was
told by Barbara that her husband,
Cary Grant, sometimes had queer
moods and showed indifference to
ward her guests which made her ner
vous. From the court records:
Judge—How did this affect you?
Barbara—It made me nervous.
Judge—Did you require the serv
ices of a doctor?
Barbara—Yes.
Judge—Decree granted.
_•_
Curious fellows, these jurists. If
all the women in America who were
made nervous by their husbands got
divorces there v^uldn’t be a handful
of homes left in the land. Amer
ica is what she is because the wives
and mothers bore a lot with the
old man and managed to take a lit
tle nervousness in stride. There are
thousands of husbands whose be
havior toward the wife's friends is
at times pretty bad. But even if
the average husband started heav
ing crockery the wife would over
look it. Only when he hit a guest
would she call a doctor.
• • •
MUSINGS
It is a fairly safe bet thut the year
I94H will go down in history as the
twelve months that saw nobody putting
in any claims to be a superman.
•
It is going to seem nice to phone the
fuel-oil man without beginning the
conversation with a supplication, an
apology, a character testimonial and a
claim that you know his cousin use It.
_*_
Overheard at a gas station: Just keep
cranking until she begins to resist.
Released by Western Newspaper Union.
By VIRGINIA VALE
ONE year ago Darryl
Zanuck, of 20th Century
Fox, selected five compara
tively unknown young play
ers and predicted that within
12 months each would be a
star. He was right. Jeanne
Crain, Dick Haymes and Vivi
an Blaine are currently starring in
the new technicolor musical, "State
Fair" — though they don’t seem
exactly stellar material June Haver
is seen in "Where Do We Go From
Here?” with Fred MacMurray. will
be seen with Betty Grablc in “The
Dolly Sisters." William Eythe
played opposite Tallulah Bankhead
in "A Royal Scandal," and will be
seen in a starring role in “The
House on Ninety-Second Street," the
F. B. 1.-atomic bomb news-drama.
• • •
Alec Templeton, the blind pianist
satirist of the air’s "Star Theater,"
recently returned to New York from
Hollywood, where he completed
ALEC TEMPLETON
work on a Metro film, “Cabbages
and Kings.” He composed the score,
will introduce the music on the air.
• • •
When the “Confidential Agent”
company at Warners’ had to shoot
around Charles Boyer, who was ill,
the studio announced that he’d had
a severe summer cold and sub
sequent laryngitis. Unromantic gos
sips reported that he really had
lumbago.
• • •
Many radio stars — among them
Carol Bruce, Ann Sheridan, Ezra
Stone, Eileen Barton, Yvette, Mar
ion Loveridge and Bobby Hookey—
got their professional start on the
Children's Hour program; they owe
much to the astuteness of Mrs. Alice
Clements, who produces it, and who
encouraged them. Marion has her
own program now, on NBC.
* • •
For the first time since his Vienna
song-and-dance days 10 years ago,
and for the first time on the screen,
Paul Ifenried sings in “The Span
ish Main.” The song is “Taunton
Dean,” first heard In a play, “The
Jolly Crew,” in London in 1641. It
later became a favorite of pirates in
the inns of Tortuga Island, West In
dies — hence its selection for the
picture.
• 01
Because the army asked Kay
Kyser to extend his Pacific enter
tainment tour several weeks after
the Japanese surrender, the “Col
lege of Musical Knowledge” Is only
now returning to the air. The ole
professor had no time off when he
got back; he was scheduled to star
in a new film musical, “How to
Be a Wolf," and Hollywood was
waiting for him.
• • •
When the new comedy, “Mr. Coop
er’s Left Hand,” opens in New York
next month the first row will have
an organized cheering section, made
up of the entire cast of the air’s
“The Aldrich Family.” The author of
the play is Clifford Goldsmith, cre
ator of the successful radio show.
And the star of the play is House
Jameson, who plays “Sam Aldrich”
in the radio series.
• • •
All these years that Guy Lom
bardo and his orchestra have been
playing for the public it never oc
curred to them that their facial ex
pressions made a hoot of difference;
they just concentrated on their mu
sic. Itut that’s been changed. Holly
wood’s changing it. On the coast to
make “No Leave No Love,” the
Royal Canadians are being coached
on how to make faces like musi
cians.
• • •
For the first time Artur Rubin
stein, famous pianist, will play for a
picture. He will record the entire
piano score for Frank Borzage’s
“Concerto,” for Republic, which
features Rachmaninoff's second pi
ano concerto — and will receive
$85,000.
• • •
ODDS AND ENDS—Dennis Morgan,
of “Christmas in Connecticut," was once
a sodn jerker at a drug store in Pren
tice, IPis.—says he invented a banana
split that made him famous locally . . .
Alan “Falstaff Upinshuui” Heed has
joined “Duffy's Tavern"; he isn’t re
turning to the Fred Allen show because
he prefers to live on the West Coast . ..
Ozzie Nelson and Harriet Hillitird cele
brate their tenth wedding anniversary
in October . . . Tommy Dorsey was fig
uring the cost of his Victory Garden
during rehearsal of the RCA program—
the cold hard figures revealed the sad
fact that each tomato cost appro ximalely
six dollars.
Smart Tiro-Piece
Frock a ‘Must9
(HiPU-8905
\X7 EAR this smart two-piece
W frock for dancing, earning or
learning. The gay jacket lias a
softly flared peplum to accent a
cinched-in doll waist—the skirt has
graceful gores. A “must" in
every junior wardrobe.
• • •
Pattern No. 8305 is designed for sizes
11, 12. 13, 14, 16 and 18 Sire 12, short
sleeves, requires 3J,i yards of 35-lnch ma
terial.
Due to an unusually large demand and
current conditions, slightly more time is
required In filling orders for a few of the
most popular pattern numbers.
Send your order to:
SEWING CIRCLE PATTERN DEPT.
530 South Wells St. Chicago
Enclose 25 cents In coins for each
pattern desired.
Pattern No. __ Size
Name. __
Address_
Have You Tried
PINEHURST
CIGARETTES
Made with Gin Seng Extract?
Treat yourself to the pleasure of this
fine smoke—a smooth, mellow mild
cigarette—made of selected tobaccos,
especially blended to the popular Ameri
can taste. Plnchurst Is truly one of
America's standard cigarettes—not a
shortage substitute—enjoyed for years
by smokers who demand satisfaction
from their cigarettes. Plnehurst's ex
clusive Patented Panax Process employs
extract of Oln-Seng root for modern
moisture conditioning—the only cig
arette permitted to do go.
The use of Oln-Seng Extract as a
hygroscopic agent Is an exclusive, pat
ented process of this Company. Tbs
mollifying features of Oln-Seng Extract
may help to relieve dry throat, cigarette
cough, and other Irritations due to
smoking. These cigarettes may bo found
much more pleasant and safe for those
with ordinary colds and other respira
tory difficulties such as hay fever,
asthma, etc.
GET A CARTON DIRECT
If your dealer cannot supply. Send 11.90
East of the Mississippi (tl 65 West) for
postpaid carton of 10 packs to:
R. L Swain tobacco Company, Inc.
Spt.rK Street, Danville Virginia
r I
I WABTyH^B
1 mount P«*J*'g;oomed, well- I
1 m»uy well * Ood »«ftrt 1
1 informed H '^|hPovde«. 1
I McKesso" * I
I Bridgeport. Coo . I
r__
Heats All Day and Night Without Refueling
Exclusive,
Patented,
Interior
Construction
*87471.
and Om. Pat. No.
«iWW. Nama Hfu.
.H.ftGui. 1*1.0rf
(Dm. inliP
"modelsmH
MOOIU^^
Nearly a MILLION In Use!
If you need a new heating stove, now is the time
to see your dealer and inspect the famous WARM
MORNING Coal Heater. WARM MORNING is
the coal heater with amazing, patented, interior construc
tion principles. Heats all day and all night without refueling.
Holds fire several days on closed draft. Your home is Warm
every Morning regardless of the weather.
HOLDS 100 LBS. OF COAL
Requires no special diet. Burns any kind of coal,
coke or briquets. Semi-automatic, magazine feed.
Start a fire but once a year.
SEE YOUR DEALER—and have him show you the remarkable feature*
of this distinctly different coal heater . . . that outsells all other*.
LOCKE STOVE CO., 114 We»t 11th St., KANSAS CITY 6, MO. (W ta)
I
The Baking Powder
with the i
BALANCED Double Action
Clabber Girl’s balanced double action makes it the natural choice for the
modern recipe ... for just the right action in the mixing bowl, plus that
final rise to light and fluffy flavor in the oven.
*Save Che d^JCitchen CJald ^
^ (jour Country Cjeech CJhem!
SPRAINSAND STRAINsl
Aches and Pains ■ Stiff Joints • Bruises